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tv   Senate Judiciary Committee Hearing on 5G Technology Impact Part 2  CSPAN  May 14, 2019 10:56pm-12:03am EDT

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sen. graham: ok. best the hearing will resume. >> thank you all for being here. what we are trying to do is make sure our partners and allies understand that they need to go through a risk-based assessment. assessment is that it will probably not huawei and something that our partners are leaving on. is that accurate? >> that is exactly what we're asking them to do. >> when we talk about the role of government, how far does that go? this hearing could easily be held in the senate armed services committee to be honest with you, because the nature of the military threat, probably at some point we should. the we're talking about u.s. government, does that requirement extend to all of our their vendors, and supply chains? what about their structures?
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ndaane of last year's companies, the federal government dollars, contracting and procurement grants cannot be used by companies beholden to the chinese state, cannot be brought into the supply chain. we are working on the regs to implement fact. >> about state and local governments? >> we do not have the authority in the system of laws we have here. >> is it fair to say that if there is any federal dollars flowing down to any i.t. initiatives, we can create something of saying that those dollars cannot be expended to forward huawei? >> that exists right now. >> and the f.c.c. has an ongoing proceeding where they are considering prohibiting the fund for any high-risk technology vendors. >> certainly, state governments
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should understand -- i understand you made a point that was very important about the smaller companies who have this economic -- actually, i think it is a false economy, i have a copy of the report from the u.k., that if you look at the we have to-- understand what the chinese are doing here. if they come in and tell you that we will do your mess for less, not only that we will sell you the tele-communications equipment, but we will have our folks set it up and patch, you are literally putting a fox in the hen house. what we need to do is educate. i will work with our state legislature to have them basically implement at a state level what we are doing at the federal level. that is the only way that we can pull these potentially malign technologies out of the infrastructure.
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when we talk about 5g, i do know a fair bit about it because i have worked in the space for a while, when you talk about public safety threats, we talk about health care, those are all things that are outside what you're trying to do, but critical to a certain extent to securing this infrastructure. would you agree with that? >> yes, sir. >> definitely. all the people of the value chain who rely on the infrastructure should have is a in the kind of security, and the vendors need to have trustworthiness. >> and i think another thing we have to educate people on, when we talk about 5g, a lot of that is at the edge of the backbone, the wireless communications that will unable a number of things that we want to do. but we haven't really talked about everything moving back up to and including the massive infrastructure based on quality technology. if you look at most of the cloud computing companies based in the united states, their underlying
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technology is extensively huawei , based on price points. them about the total cost, they will start making better decisions. but i think we need to recognize that if we get the public side of this equation right, and i believe we will, i think our n.a.t.o. allies, the e.u. will recognize the strategic importance of it. but we still have this great exposure to a highly disruptive with thepability infrastructure still continuing to buy the product. which is often time based on intellectual property theft from innovators here in the united states, and that is one of the reasons they can produce it at a lower price point. we have to do a better job of making sure that other companies , if the members of this economy have a pull factor for this economy, it is a most a greater
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threat than what we're trying to do for the federal government. would you agree with that? >> yes, sir. i think one of the things we tend to lose sight of, as you mentioned, the backbone, it really does start at the water's edge. cable, huawei marine is a big player in that space. >> we haven't even talked about the unfair trade practices china has with cyber technology in this country, we haven't talked about how they would like to diminish or reduce our industrial base for a lot of the backbone component through unfair trade actresses, those are things that fully as we move forward, we will spend time on it this committee. this is a very impressive strategy on the part of china but it is a strategy with multiple tentacles and we as members of congress need to understand everyone of those and chop them off. sen. graham: senator blumenthal. sen. blumenthal: thank you. i agree with chairman graham
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that this needs to be really strong bipartisan alarm about the threat posed by huawei, which is really the threat posed by china. what still mystifies me is, why are our partners and allies around the world, why they seem less alarmed than we are. we have been figuratively pounding the table here. >> i see this through two lenses. there is a risk lens, we talked about that today. we have a clear understanding of the vulnerabilities in their equipment, the intention of the chinese government. we have a unique experience -- >> but they have known about these vulnerabilities for years. you have reported about it, the united kingdom has a powerful report. these sources of information are
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ours., not >> and that is where the second lens comes through the economic lens,. we need to talk to our partners about the lifecycle costs of maintaining this equipment, it is not about the front, about the financing, it is about over 15 years, the true cost, not just financial, but the intellectual property cost, the vulnerability cost. we need to talk more about that. and we are doing that. >> here is the disconnect for me. even if there were an economic advantage, and you are saying that we need to convince them that in fact that supposed economic advantage is illusory, butand even if there were some economic advantage, it is outweighed by the security threat. >> i agree with you. in principle, i think the concern is that some of our
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partners may not have alternative economic options, available,is from the supply, the manufacturing runs by some of the non-huawei options, we may have bought them all up for the next five years, so what we have to do is continue to push supply but also given alternative options. sen. blumenthal: should we have a review body the in the u.k. to audit foreign telecommunications equipment that this country uses comedy zinc? ambassador? >> we think -- that this country uses, do you think. ambassador? >> we think that any type of certification process can still have its vulnerabilities. rely on this type of certification of number works.
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inmeans putting trust the design of the security in the system from the start. sen. blumenthal: do you agree krebs that it is a lack of an economic alternative, and i would delete the word economic because is it really the lack of an alternative that you are saying, that to the logical, lack of supply, lack of capacity to produce the equipment necessary, is that what you are saying? the don't want to pat united states on the back too much, but we have been thinking about telecom and the national security lens. in many parts of the world, the telecoms regulators are not focused on the national security aspects so they are not able to cause, the supply chain decisions to be part of a calculus about which renders the use. sen. blumenthal: here is my ofnking, through the lens
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the armed services committee, and our national defense, we are spending tens of billions of dollars, literally, tens of billions of dollars on aircraft carriers, on a new joint strike fighters, all of this potentially more vulnerable because of the kinds of compromising equipment that you are talking about. we are literally putting our national security at risk, and ultimately, it is theirs as well , because they are buying stuff from us, the next generation and they are depending on our aircraft carriers, which ducks inatin sitting the middle of the ocean if our communication systems are vulnerable. should we not be devoting the same kind of investment, if it is economic, again, to use your
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word, if it is an economic challenge that we are doing to all these bright new shiny objects in the air and on the sea? >> i am not saying it is an exclusively economic decision, i am saying that there is a balance between the economic peace and the security piece, and some countries just don't have an alternative. we talking about a global supply chain challenge where a good bit of the equipment is being manufactured in countries other offered by or being manufactured in countries we may not agree with. is kind of the new cyber security supply chain risk management. the department of defense is investing in a significant amount of time -- i know that the acting secretary thinks about this, having heard him speak on this a number of times, we have been sticking on this a great deal. it is a significant area of focus going forward. sen. blumenthal: well, it is a
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bad day for china in this hearing room, but really only in this hearing room, because china will continue to exploit our somehow, the, and economic force or military force of this country has to be in favor of expanding back supply chain or doing something to counter this threat. because right now it is not having an effect. >> i think it is also important to talk to our partners and allies about creative funding mechanisms to allow their telecom operators to buy trusted technology rather than going with the cheapest. sen. blumenthal: thank you. blackburn.: senator sen. blackburn: [indiscernible] graham: you have been hacked.
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sen. blackburn: there were go. i apologize for that. , i want to go back to something you said about the long-term cost. probably with our allies, the most significant long-term cost is if they go with huawei equipment, they are giving the chinese control of their information distribution system and an insight into everything that they are going to do, and that will be a very expensive freedomsthem and for that they cherished. so i hope that they do think about that. it is say this, to me, important that as we talk about this issue, we talk about having a national strategy, not government control of a 5g network, but a national strategy
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to approach this. p on a great deal us a good deal cornyn has aor good bill that focuses on strategies.g i have legislation we are introducing today that deals with the supply chain. whateals with knowing those economic threats are to the supply chain, because that is something that is significant as we talk about the utilization not only in our commercial space in our military space of a 5g network. , which is primarily located in tennessee, with our special ops guys, our cis group, they will all site 5g as something that -- they will all 5g as something that is imperative to them.
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if we can wrap up saying that there are four legs to the 5g strategy that we need to have, we need to look at siting reform, harmonization of standards, availability of spectrum, and a secure supply chain. all, which allou agree with that? would you add or subtract anything to that? >> i think that is generally right, whether we have talked about it particularly of late is therisk management piece, standard piece in the international corporate peace, and the regulation peace, and then ultimately, the economics peace. >> i think that is a good summary. sen. blackburn: ok. we are always looking for ways to recoup and to get the economic spectrum out.
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, china, south korea, japan, are all looking at ways to allocate within this spectrum. talk just a minute about what is being done by some others, and changes we should be making to spectrum policy in order to facilitate deployment of 5g? beste sbc is probably positioned best the s.e.c. is probably best positioned to talk about that. each of those types of spectrum has the qualities an about how r travels, in order to secure data. mid-band could have greater propagation, the low band is typically what we use today in the united states for greater distances. so it is important to have a mix of all three.
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>> i know that the s.e.c. is looking at making all three available. sen. blackburn: anything to add? >> i agree with that. the s.e.c.. and dod have been doing a good job. we have been co coordinating on spectrum release and we look forward to the continuing. sen. blackburn: thank you all for being here. i know that we will have another panel. as we talk about commercial development, and of course, mr. krebs, we mentioned memphis -- verizon is doing a 5g project we have some good studies that are being done, fedex is doing some work, we have at&t in nashville, and some 5g products there, but as we talk about the advancement of a.i. and the utilization of these in both the commercial and military space, getting this right is going to be important. making certain that we have a
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strategy in place that f rees up free enterprise to innovate will be so important. thank you all for your time and insight. sen. graham: thank you. senator feinstein, i think you had a follow-up question? sen. feinstein: thanks very much. i was just reading something called the huawei cyber security evaluation center oversight board annual report. and i would like to read a section to you. is 3.16 -- the work of, i don't know what you call it, the organization summarized and reviewed serious and systematic defect in huawei's software, engineering and security competence. for this reason, the
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organization continues to advise the board it is only appropriate to provide technical assurance in the security risk management possible for equipment currently deployed in the u.k. , or software say engineering and cyber security processes lead to security and quality issues including vulnerabilities. the number and severity of vulnerabilities discovered along with architectural and build issues by the relatively small team in acsec, is a particular concern. if the attacker has knowledge of these vulnerabilities and sufficient access to exploits them, they may be able to effect the operation of a network, in some cases causing it to seize operating correctly. then it goes on to other impacts. but from what i read from this official report to the british
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government, it is a vulnerable system. would you agree with that? >> yes, absolutely. it is not just a vulnerabilities there, but the ability of the chinese government to require a company to cooperate with them and talk about vulnerabilities. if you will hack into a system, the best people to ask is the people who designed it. that is what the chinese government has access to. >> i agree. the last section, 3.18, particularly if an attacker has knowledge of these vulnerabilities, it may not necessarily be chinese or huawei, the attacker could be russian, iranian, north korean or otherwise. if they know about the vulnerability, it is a wide-open system. this is what the n.s.a. references as the bug door. sizable vulnerability plausible vulnerability built into the system that any
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attacker can take advantage. sen. feinstein: i have never read anything quite like that. >> i love this report, it helps us out significantly, and i think the more people that read this, the better. i was meeting with the rural tele-cos yesterday and i give them a copy of the report. sen. feinstein: would your assessment be that -- i am concerned about espionage. that the system is more vulnerable to espionage because of vulnerabilities in it as 'pposed to the exploiters knowledge and ability? >> it would be difficult to make a comparative assessment. as a mentioned earlier on, concern about three things, the quality of the product, the vulnerabilities baked into it. and even if you fix those vulnerabilities, imminent huawei
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or whomever else fixed every issue in this product would still have, as you mentioned, the update cycle that is subject to the control of the government of china. that is the second piece. the third is the physical access by management teams, the nationals that they sent out to maintain the system. so there are three potential liabilities that could be exploded there. -- sen. feinstein: could you quickly summarize what the status of huawei is in terms of its clients, the scope of activity? >> domestically or internationally? sen. feinstein: if you could do both, that would be great. theomestically, as ambassador mentioned, generally not pleasant in the big for -- the big normal for wireless providers. of the ruralome
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tele-committee shall companies, and the f.c.c. is looking at those issues. have a large presence here in the united states. internationally, it is a developer different story. -- it is a different story. it is a pretty enticing offer if you can get to 5g quickly using a fully integrated stack provided by huawei. europe is a different story. they are present, but there is tension there and it is not a fast lane. chairman graham thank you, senator cruz. sen. cruz: thank you, gentlemen for your testimony. earlier this year i raised concerns about huawei's implementation of the five eyes networks. i raised them with secretary pompeo replied that the five eyes networks could be effectble, and what
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efforts in huawei technology was present. as you know in 2012, the house permanent select committee on -- committee on intelligence warned that mitigating risks from huawei or zte is "virtually impossible" unfortunately, britain announced it would allow huawei to access non-core parts of its 5g networks. can you assess how britain's decision impacts five eyes, ambassador? >> we are quite concerned that written would make that decision. they say they have not made a final decision but what has leaked is that there is some ability to have huawei in the radio network, which is the port consumer. the if you are able to disrupt about or conduct espionage there, you have a significant number of concerns. you could cause infrastructure to stop operate. it is dangerous.
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sen. cruz: is it possible that huawei's presidents could allow it -- huawei's presence in those networks could cause problems in accessing the network? >> absolutely. 5g will more seamlessly integrate the core and the edge, so if you have a presence in the edge, you will be access the the core function as well. sen. cruz: what are we doing to make sure our allies and partners do not follow that decision, to ensure that others don't follow that? >> we have an ongoing diplomatic campaign around the world that is very active, particularly .ith the five is australian last august said they would not allow a vendor under the potential extrajudicial power. of a foreign so. that would prevent huawei because of the system in china. we had a positive decision out doing zealand, and we are
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to monitor and talk closely with canada and the united kingdom about the future of their decision about the 5g network. we have also had success in japan recently on this point. sen. cruz: mr. crabs, another concern we hear a bit about his china and chinese companies seeking to exert pressure on within standard-setting organizations, so that those organizations promulgate standards favorable to chinese national interests. extent tell us to what is this taking place, and what risk does it close? >> not sure i am the right person to answer this authoritatively, but based on my understanding, the way the standards process works, they are flooding the zone's, so to speak, putting a significant amount of resources, companies from china and from other countries. they are trying to set the playing field to continue this horrible analogy. to try to set the playing field
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to their advantage so that they are standard that they are already deploying within china. they have a standard developed. they want the global standards to follow their standard. that is what they are trying to set up for. sen. cruz: what can we do to prevent that from happening? >> engage in work with our partners. we talked about earlier. continues to invest in the standards process. we need to continue. job.does a fantastic of that american companies have engaged. we are holding. -- i think we are holding the line but we cannot let up, we have to continue pushing forward. sen. cruz: another concern, huawei has research partnerships with avril u.s. universities -- with several u.s. universities. the communist party in china uses talent programs, exchange programs to steal and transfer sensitive information.
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since your testimony last year, have you seen a deeper awareness among american universities about this threat of espionage? > yes, sir. part> -- chairman bert and other ranking members have posted hearings and not together a range of stakeholders in academia. we have briefed two different groups of presidents, chancellors, and boards of regions of american dashboards regentst -- boards of of american universities. have seen engagement particularly with the confucius institute and other tactics that the chinese state is using, there has been a shift. i talked about how the industry is shifting. our colleges and universities have shifted as well. it is just the general risk awareness of network security. sen. cruz: final question.
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should the granting of student that consider the threat undergrads or graduate students or postdoc students, particularly from communist china, should it consider the threat of esther nash or -- threat of espionage or the threat of intellectual property theft? >> it should. but an 18-year-old coming out of mainland china does not necessarily have a file in the intelligence community. also, they are not necessarily operationalized at that point. what happens down the road is a phone call comes, by the way, when you come home next week, when all you bring home a thumb drive or two from your research? that is how the process works. sen. cruz: thank you. chariman graham: thank you both. excellent job. we will now move to the second panel. thank you both very much.
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chairman graham: thank you very much. the second panel includes the senior vice president of the center for strategic and international studies, dr. charles clooney, executive , the seniorvpi fellow of energy economics security program center for the new american security. thank you all. mr. lewis. mr. lewis: thank you, mr.
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chairman, and ranking member feinstein. in 2003 thousand three right after i left government service, i was involved in a classified n.s.a. study on what the united states would do when it was dependent on foreign telecom suppliers. it turns out the answer is we would do nothing. here we are, i am glad you recognize the severity of the problem. telecommunications is. --trategic industry loosened the last u.s. company in this space went out of business a decade ago. it means we are reliant on foreign suppliers. in turn, foreign suppliers are reliant on american technology. no one would make 5g without qualcomm, cisco, and other leading companies. china plans to spend more than $100 billion to end this dependence and to dominate the telecommunications market using huawei, a company we have heard that has extensive ties to the
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government. >> these three risks as you have heard, they provide intelligence advantage if you use chinese 5g, china has the ability to disrupt telecommunications services, and finally, china's 5g mercantilism communications. china offers huge -- huawei offers huge discounts to a potential customers because of government support. while benefits from china's economic espionage. china is also determined to control the international standards process. there is no disagreement among u.s. partners on the risk of using huawei equipment, the descriptor limit -- that this agreement is managing the risk. some countries are reluctant to do this and argue that a partial ban is sufficient. the u.s. needs four sets of policies to manage 5g risk. confront china
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over its mercantilism, confront our chinese partners and bring them in line with our international practices. this will be difficult because many partners including key allies fear chinese retaliation. the u.s. needs domestic the u.s. needs domestic policies to strengthen its technological base and ensure that 5g is deployed in a timely fashion, supplierwe preserve diversity. no phone company, even chinese phone companies, wants a world where hauwei has a monopoly. finally, the u.s. must create a world to communicate securely over networks that will invariably contain 5g technology. 5g is part of a larger contest with china over global interest
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internet.ure of the this is not a cold war but it is also not the partnership we expected 20 years ago. thea wants to displace united states and change global norms and institutions to serve its interests. we no longer have the luxury of thinking as ourselves as the only tech superpower. our policies must adjust to reflect this. they need to expand america's technological strength, improve our ability to innovate, and protect companies from foreign predatory practices. this can involve countries other than china. we are at the start of a long struggle to integrate china into a stable international order. this means we need to resist whenever it uses coercive tactics to achieve its foreign policy and economic goals. it needs -- we need to recover the ground plots since the u.s. and china entered the global markets without making a change
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in its behavior. 5g is one of the emerging technologies that will frame the struggle. i thank the committee for the opportunity to testify and ask my written testimony be entered into the record and look forward to your questions. thank you. thank you. chairman graham, ranking member feinstein and committee members, first i would like to highlight that 5g is the most secure technology we ever developed. it adds protections for euchre -- users, overhauls back and, and leverages software to find philosophy to improve security applications like smart grid and connected cars. however, there is a looming anxiety over china's prominent role in the development of the technology. china and huawei in particular have skyrocketed from inventor to innovator.
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first and foremost, china's motives surrounding huawei are economic. this is an initial version of the belt and road initiative. as we have discussed this big financial and economic component, in particular, huawei and zte leverage chinese development banks to offer very favorable capital, terms on capital investments, to help subsidize deployment of huawei and zte structure globally. however, this dominance creates a number of national security concerns. independent of huawei and zte, china has sufficient penetration into the global internet that they can re-vector large blocks of traffic to deny access to the internet. for example in 2010, china telecom hijacked 15% of the internet for a total of 18 minutes and was able to rotate through chinese systems.
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there have been a slate of more focused attacks targeting western governments, news organizations and financial institutions that have all been launched from chinese telecoms here in north america. while the sec has recently denied china's mobile license, they have had one for over two decades in china and have used this to execute cyber attacks. increases in market shares will only give them a larger platform attacks in less attributable ways. there need to be consequences for blatant attacks on the internet. as we discussed, access to a huawei router or zte based station could allow targeted surveillance, injection of malware could be used to defeat encryption on the world wide web. essentially, these devices can be into the -- stitched into the global internet fabric.
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gun want to see the smoking zte.awei and certainly they have demonstrated a poor track record when it comes to intellectual property rights, and even in giving bonuses to employees for stealing intellectual property from competitors. however, there is little direct efforts that there are -- evidence that security flaws are being introduced on behalf of the trainees government to enable pla operations the uk's oversight board reported several times throughout the proceedings and points to software engineering practices that could create vulnerabilities to anyone including the chinese government also as was mentioned earlier, keep in mind that due to software update processes, vulnerabilities can be introduced after the fact. operates thely
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equipment on behalf of host nation telecommunications companies. a backdoor is not needed if you already have a key to the front door. we don't need a smoking gun to know the risks are intrinsically greater with chinese equipment due to the trainees government's -- chinesete owned government's role in the state owned enterprise we need to focus on 5g applications. to a certain extent, they are and -- 5g provides unique services that can create slices of the internet for critical services research and development should focus on how to design these. infrastructure should develop best practices and policies around the 5g applications that are critical infrastructure will rely on. the u.s. needs to make investments now in research and
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innovation to ensure leadership in the six g. each generation takes around 15 years to mature from early-stage research to deployment. the clock started a few years ago. agencies like the national science foundation and darpa should start now. anshould look at launching initiative similar to what the --has that leverages 30 billions of euros in investment. this initiative was the fuel that organized europe in a coherent direction and ultimately defined what 5g is today. the u.s. should lots a similar initiative focused on 6g and if we don't do so in the next couple of years, china will. and iyou for listening look forward to answering your questions. >> thank you for the opportunity to testify today. i am privileged to be here on such a distinguished panel. i have submitted a written statement for the record.
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rather than simply summarizing that statement, i thought i would use my introductory remarks to make a couple of discrete comments on issues raised during the first panel earlier this morning. , as i think came out in the first panel the success for , the united states in the race to 5g will depend ultimately primarily on the investments we make here in the united states. as my colleagues on this panel have stated, it is undeniably true that they have benefit interested a variety of unfair and at times illegal state financing, economic espionage, and other illegal practices, we also need to recognize away
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competitor, as is china. they spent $15 billion last year in r&d spending, ranking number five among all technology companies globally. it has 15% of the standard essential patents related to 5-g technology, an issue that senator coons brought up earlier. it offers a product that has come through today many foreign companies and governments find quite attractive, both on price, but also because it can be rolled out quickly and operates commercially. ultimately, unless the united states makes the investments here at home to develop better technology, and in particular to lead in the development of the technology that will be built around 5g, as assistant krebs said, we will not win this race. it is important we confront china internationally. we need to focus at least as much on the investments we make here at home.
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on that note, i would like to commend recent steps by the fcc and the trump administration to try to speed the deployment of 5g technology here in the united states and encourage investment. earlier this year, last month, the fcc announced one of the largest auctions of spectrum in history which will occur later this year across a range of different bands that can be used by 5g. the fcc also took regulatory steps to ensure that the many tens of thousands of actual towers that need to be built domestically to roll out 5g can be built without facing extensive local government regulation. second, i want to comment on the espionage threat, which has come up repeatedly throughout this hearing. it is abundantly clear to all of us here in the united states and many of our allies that huawei equipment presents a very serious espionage threat, both in the united states and to our allies. i do not need to repeat the many statements that my colleagues on this panel and assistant secretary krebs and others have
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made. the only point i would make if we think about espionage, and chinese espionage here in the united states writ large, yes, 5g and huawei's development of technology and deployment globally is a significant espionage threat. but i think we also need to think about the espionage threat posed by another issue of interest to this committee, which is the fairly low standards of data privacy here in the united states. we spend a huge amount of effort thinking about the risk of chinese hacking, which is a very real risk and a growing risk that must be addressed. it is also quite possible for commercial actors, including chinese front companies, to simply purchase vast quantities of americans' personal data , which they can exploit for espionage purposes. i would urge members of the committee to think about data privacy as a national security
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issue as well as a domestic policy issue. finally, i'd like to make a closing remark on the international diplomatic campaign that mr. strayer talked about on the prior panel. i commend the trump administration's recent diplomacy globally to try to make clear to foreign governments what the stakes are and the costs that countries will face if they deploy huawei equipment at scale. however, i agree with dr. kreb'' statement that we also need to think about companies to deploy equipment rapidly and at scale. for many of these countries, particularly in europe, they have stark memories of having fallen behind the united states and the deployment of 4g, and as a result, lacked much of the
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innovative ecosystem that has served the u.s. so well. i think they are reluctant to slow down the deployment of 5g overseas because of the long-term economic costs they face. we need to be thinking about what can we do to help our allies speed the deployment of non-huawei 5g as we continue to draw the contrast women between contrast between huawei equipment and non-huawei equipment. >> thank you very much. as i understood the first panel , it seems to be the policy of the united states is to tell our allies that when it comes to purchasing 5g programs or material or 5g systems, there are certain criteria that we want you to meet before you purchase it. did you-all get that? everybody said yes. ok. part of the criteria is to change the communist chinese government. seems to me that one of the
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concerns we have is the way china does business. do you agree with that? so we are telling the world, basically, you can't buy huawei communist, chinese-owned equipment even if it's a private company and still have the same business national security relationship with the united states as you did before? is that an accurate statement? >> [inaudible] sen. graham: seems to me we have. aren't we telling them if you buy these systems, you will be shut out of intelligence sharing? >> senator, i might take that one. i don't think we have been that blunt just yet. we certainly hinted. senator graham: i think that's -- maybe i misread the first panel. do you get that, dr. clancy?
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dr. clancy: i think we like to approach it to the lens of risk management, because that allows us to not single out specific countries or companies. the effect is perhaps the same. senator graham: the point is, i'm trying to do two things here. bring clarity. if you are an ally of the united states, we are pretty much telling you that if you buy these systems, your relationship with the united states will change fairly dramatically. you bring up problems, the other panel did also, we are not giving people good alternatives. they are not going to stay stuck in time forever. there are two things i have gotten out of this hearing. i support the policy of the united states to tell allies don't go down this road with china, but i also think it's incumbent upon us as congress to push alternatives that will not trap our allies into old systems that will advance the cause for all of us.
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does that make sense? is that our two goals here, mr. harrell? mr. harrell: i think those are the fundamental two goals of the u.s. policy here. senator graham: dr. clancy? dr. clancy: i agree. >> the problem we have, i must be the problem child on the panel, i apologize, mr. chairman. huawei's all over europe, and the 4g networks the europeans used depend on huawei. it's too expensive to rip it out. that's part of why they are balking. to mr. harrell's point, you can deploy 5g faster if you layer it over 4g initially. so we will need to hold the line, but it will not be black or white. it will be a path to move them away from huawei. sen. graham: do you agree with the concerns expressed in terms of our national security if they 5g, chinese technology, that the concerns we have all talked about are heal? -- real?
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dr. lewis: huawei's been a problem for its whole existence, so yes. senator graham: i don't know what to do other than try to find a way to move forward. pretty clear to me as long as china is china, we feel threatened in this space. we are telling our allies don't make -- go down this road. don't make us pick between doing business with you and having to compromise our systems. seems to me that this should be a national security, economic priority of the congress and the trump administration. with that, senator feinstein. senator feinstein: i'm reluctant to say this because i don't have the knowledge that all of you do. it's my understanding that part of the difficulty is huawei
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equipment is 20% to 30% cheaper and often comes with generous leasing or loan terms. huawei is able to offer lower prices because of support from the chinese government. i believe that's a fact. i don't know how we fight the 5g situation, but it seems to me that the learning lesson ought 60 -- 6g, and by we ought to understand that the world we are playing in is a very difficult world. i don't think, if a country in europe can get 5g for 30% less than the united states, the aca necessary incentive not to do that. but i would hope that as people look at the next generation, we approach it differently, learn .rom the problems here would you comment on that, mr. lewis?
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dr. lewis: thank you, senator. i was talking to an executive from a european telco involved in a bidding protest with huawei. he said they offered them close to a 90% discount. i'll use his words, because they were desperate to get into our telecommunications core. we can make assumptions about why huawei is desperate and where they are getting the money. i think that you can make the political case that chairman graham has laid out, that this is not something you can do without risk. china has a massive global espionage campaign, and if you , it will onlyi accelerate that. dr. clancy: i'll note the free hand of capital market doesn't work well in the face of heavy hand of industrial policy, and that's what we are facing right now. how do we maintain our view of not picking winners and losers here in the united states, and in terms of federal subsidies,
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and be able to compete against an adversary who is doing that. -- who is doing that? your point about 6g is excellent. i think that's a good starting point in terms of where we need to make investments now. and not necessarily in the same top down, heavy-handed way you see in china. i think there are investments in r&d that could create an environment where the u.s. emerges as a leader in the patents critical to the standards process that could then form the basis of 10 new start-up companies that could one day compete with huawei. mr. harrell: i want to pick up on a beginning comment that dr. clancy made about the way to push back on china's industrial policy, which is one of the factors giving huawei an advantage here. i could not want to dismiss huawei as a competitor, but one of the factors is clearly below market funding and a variety of
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unfair practices. clearly this week we have an ongoing trade negotiation with china. given the chinese and the trump administration did not reach a trade agreement last week and president trump has increased tariffs on china. we don't know where that trade negotiation will go, but vehicle thatt is a the administration can and should be using to push for really fundamental reforms on this kind of chinese industrial policy writ large, of course, but maybe very specifically with respect to chinese 5g telecommunications rollout generally. chairman graham: senator whitehouse. senator whitehouse: thank you, chairman, to the panel for being here. cars are very dangerous things and they kill lots and lots of people. but there are super high utility pieces of equipment so we put airbags and seat belts in them and use them.
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bazookas don't have the same danger to utility, so we forbid those. so question one is, is chinese car, or more like a bazooka? can you safety around it or do you need to try to prevent it? dr. lewis: i'll go first, senator. and hello. in talking to some of our nato allies, they would tell you that 5g does expand the possibility of chinese espionage, which is already rampant in their countries. they also -- senator whitehouse: car or bazooka? is it something you can add safety features and deal with and we should put up with that? dr. lewis: no. cars ortehouse: bazookas, mr. clancy? dr. clancy: i would go with bazooka in that the effects of a cyber attack are nonlinear. with cars the safety issues are linear. they affect individual vehicles
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and passengers of those vehicles who are making informed risk decisions in theory about what to drive and how to drive. don't you have that with a global telecommunications. senator whitehouse: mr. harrell. mr. harrell: when i look -- sen. whitehouse: you are not mic 'd up. i just want an answer. : i think it's a bazooka, but for most foreign governments looking at this, it is a car. that's a fundamental issue we have to grapple with. sen. whitehouse: let me ask each of you, and just because your name is clancy, let me start with you. each of you, what is a plausible worst case scenario that we would face from the 5g huawei risk? dr. clancy: i think the worst case scenario is part of a global conflict. china is able to completely control the internet and fundamentally cripple our
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ability to do command and control in a major combat operations. senator whitehouse: dr. lewis. dr. lewis: the worst case can be huaweiould dominance, which would damage our ability to be innovative and chinese control of the telecom networks that would allow them to disrupt critical services. senator whitehouse: they could start writing programs and code and conduct their business in such a way american companies were effectively frozen out or -- disadvantaged? dr. lewis: the 4g leadership we had in innovation might shift to china. worst case. senator whitehouse: mr. harrell. mr. harrell: i agree with dr. lewis. i think the worst case is china dominating the whole ecosystem. whitehouse: the economic more than the global risk? mr. harrell: the national security risk is real particularly with the denial dr. clancy talked about.
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that said, i think that probably there are going to be ways to partially engineer around some of that risk. so you wouldn't see the total shutdown in a worst case scenario. senator whitehouse: let me close out with an appreciation to csis for the work that they have done in this space. they had a brief lapse of judgment and let me be the democratic co-chair of their latest cyber report before president trump was inaugurated. they do report to the incoming president. unfortunately doesn't seem to have much effect, because i don't think the administration has come to us with any legislation. but i can't resist seeing dr. lewis here both to a, express my appreciation, and also to express my hope, because chairman graham has been very thoughtful and attentive and interested in these issues that we can find a way to break the logjam to address the larger cyber security issues and potentially 5g as a piece of
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that, with some legislative package. and what stops us is nothing of any merit. what stops us is, i think general alexander used to say, i think he was exaggerating, he used to say i respond to 137 congressional committees on cyber. so even in it was only 37 instead of 137, that's still probably 35 too many. we get into a system in the senate where as soon as one committee pops up and says i'm going to do something, the committee staff 69 other say, that's our territory. even if they are not doing anything, it's the proverbial dog in the manger problem. we get all jammed up. then on the others, we had kind of a happy moment when tomball served was over there, i think was a very solid pro, and we had dan coats, our former senator, there you go substance and politics and we'll get something going. but nothing organized has emerged out of this administration to deal with cyber legislatively.
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that's a shame because somehow or other, there is a gap here. i think the chairman would agree. there is a gap here and we need to fill the gap. whether csis can help us do that, or the chairman's leadership can help us, or the administration will finally decide they are going to do something legislatively on this, somehow we have got to, to use a phrase the chairman used in another circumstance, cross the rubicon here and get to drafting legislation. sen. graham: i think the panel. i echo what senator whitehouse said. i'm no expert but senator whitehouse understands the threats we face from cyber attacks. a couple years ago, we tried to incentivize the private sector to harden critical structure in a fashion that if you met the best business practices and invested and did the things to protect your infrastructure, you would be given liability protection. we all believe the regulatory system is not going to be able to keep up with the threat.
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you've got hardening the critical infrastructure here at home that's mostly private sector based. now we have got developing technology called 5g that if wena dominates this market, may not be able to do normal business or function militarily. we are sitting around looking at each other. we have a bunch of bills being introduced. it's going to take administrative leadership, the trump administration working with the congress to deal with both problems. i promise senator whitehouse we'll restart the conversation about how to harden critical infrastructure here at home. understanding the private sector's our best bet. they have to do it meaningfully. when it comes to the 5-g problems we are facing, it's not enough to tell our allies, no. we have to do more. we have to offer a better alternative than what china has on the table. thank you. we'll leave the hearing opened to receive information. a letter senator feinstein wants to introduce. we'll leave it open for input
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for the next three days. thank you. announcer: wednesday on the c-span networks, the house begins at 10:00 a.m. with live coverage on c-span as they consider two bills related to indian reservations. several democratic members also plan to continue reading the robert mueller report during general speeches later in the day. democrats are also predict -- planning along a reading of the report on thursday starting at noon. c-span2 has live coverage of the senate getting it at :00 a.m. as they debate the nomination of kenneth lee to be a judge.
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housepan three, a transportation subcommittee hearing on the grounding of the boeing 737 max 8 after two fatal crashes. to milwaukee, harley davidson is more than just a motorcycle company. in a lot of ways, davidson captures the arrival of milwaukee as a city where great american machines are built and made. >> the word iconic is sometimes overused, but miller is a company that is a tangible expression of the legacy that was really important and remains important. announcer: c-span cities tour is on the road, exploring the american story. this weekend, we take each to milwaukee, wisconsin, with the help of our cable partners. highest has one of the
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concentrations of german ancestry in the country. it was also here that the social -- socialist movement got its start. machineukee became a shop and you had a huge pool of immigrant workers who were very receptive to a message that promised to benefit the working class. announcer: and we will visit america's black holocaust museum to learn about james cameron, a survivor of an attempted lynching. thehe reason he wanted story published is because he realized lynching was such an important part of american history and one that is never taught in schools. he wanted people to be able to get an eyewitness account of a survivor of a lynching to see what the dynamics of the lynching were. announcer: watch the cities tour of milwaukee this saturday at
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5:00 p.m. eastern on c-span two and sunday at 2:00 p.m. on american history tv on c-span3. working with our cable affiliates as we explore the american story. announcer: this week our online video library marks one quarter one million hours of content, a milestone. in thetent is available online library and you can view it for free at c-span.org. governor: montana steve bullock has entered the race for the democratic presidential nomination with a campaign announcement and helena montana. he is the 22nd democrat to enter the race. after his announcement, he spoke with reporters. this is half an hour.

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